Valente v. TD Bank, N.A.

Civil
action commenced in the Superior Court Department on
October 25, 2011.

The
case was heard by Daniel M. Wrenn, J., on a motion
for summary judgment.

Barry
A. Bachrach for the plaintiff.

Catherine R. Connors for the defendant.

Agnes,
Kinder, & Shin, JJ.

AGNES,
J.

Before
a bank customer may sue his bank for honoring a check drawn
on his account that bears an "unauthorized signature or
alteration, " Massachusetts law requires that the
customer notify the bank of the matter within one year after
a statement of the account showing the item that was paid is
made available to him. G. L. c. 106, § 4-406, as
appearing in St. 1998, c. 24, § 8.[4] In the present case,
the plaintiff, Gerald Valente, in his capacity as the
executor of the estate of Mauro Valente (decedent or Mauro)
and as trustee of the Valente Family Trust, brought suit
against the decedent's widow, Donna Valente, [5] and her
daughter, Lillianna Saari, alleging that they wrongfully
misappropriated substantial sums of money from the
decedent's estate and a family trust that were on deposit
in TD Bank, N.A. (bank). In the same action, in the only
count in the complaint against the bank, the plaintiff
alleged that the bank was negligent and thereby liable for
damages because it was aware of the wrongful conduct by the
decedent's widow. For substantially the same reasons
given by the Superior Court judge below, who allowed the
bank's motion for summary judgment in a thoughtful and
comprehensive memorandum of decision, we hold that the
one-year notice requirement set forth in G. L. c. 106, §
4-406, bars a customer's lawsuit against his bank for
honoring a check with a forgery of the customer's
signature despite an allegation that the bank had actual
knowledge of the forgery.[6]

Background.

The
essential facts material to the outcome in this case are not
in dispute. The following account is drawn from the materials
submitted by the plaintiff and the bank in connection with
the bank's motion for summary judgment. Mauro and Donna
were married in 2000. They remained married until Mauro's
death in March, 2011. Mauro maintained five accounts with the
bank: two accounts in his name alone, two accounts in the
name of the Valente Family Trust, and one account in the name
of his business, Valente Construction, Inc. In addition, in
November, 2007, Mauro and Donna went to the bank and opened a
joint account with both of their names on the account. Mauro
was the only authorized signatory on all accounts except for
the joint account, on which Donna was also a signatory. When
Mauro opened those accounts, he acknowledged receipt of the
rules and regulations issued by the bank that specifically
require customers to review their account statements and to
notify the bank as soon as possible "if [they] believe
there is an error, forgery or other problem with the
information shown on [their] Account statement." The
bank sent monthly statements for all of Mauro's accounts
and for the joint account to his home address in Worcester.
There is no dispute that Mauro did not notify the bank within
one year after the monthly account statements were mailed to
him regarding specific items that contained unauthorized or
forged signatures. At the earliest, the plaintiff gave notice
to the bank of the allegedly unauthorized transactions in
October, 2011, when the complaint in this case was filed.

There
is evidence in the record that Mauro suffered progressive
memory loss from late 2006 through early 2008. In December,
2007, due to his failing health, Mauro executed a durable
power of attorney (POA) that appointed Donna as his
attorney-in-fact [7] The POA granted Donna "full
power to act for [Mauro] in all matters affecting [his]
business, property, rights and interests." It also
allowed Donna to "draw checks or drafts upon, or
otherwise withdraw funds from, any checking, savings or other
bank accounts belonging to [Mauro]." Donna contends that
she provided a copy of the POA to the bank in or about June,
2009, after Mauro had suffered a stroke.

The
core of the plaintiff's allegations of negligence on the
part of the bank relates to events that occurred between
November, 2007, when Mauro and Donna opened a joint account
at the bank, and March, 2011, by which time Donna had
transferred nearly $2 million from Mauro's individual
accounts into their joint account, and then further
transferred that money (and more) from the joint account into
her individual account. It was not until after Mauro's
death in March, 2011, that the plaintiff discovered evidence
of those transactions.

On
October 25, 2011, the plaintiff filed the complaint. In the
sole count against the bank, the plaintiff alleges that the
bank knew or should have known of Donna's
misappropriation of Mauro's funds, and that by failing to
act or otherwise prevent Donna from withdrawing the funds,
the bank breached the duty of care it owed to Mauro. The
record contains canceled checks drawn on Mauro's accounts
for substantial amounts during the relevant period, which
were made out to "Cash" and deposited in
Donna's personal account.[8] The record also contains canceled
checks from Mauro's and Donna's joint account that
Donna signed and then deposited into her personal account at
the bank. Two of the checks from the joint account, numbered
204 and 205, which are attached to the plaintiff's
complaint, are dated less than one year before the filing of
the complaint. No checks that are alleged to be unauthorized
and that are from the other accounts are attached to the
complaint.

The
plaintiff also presented evidence regarding the bank's
fraud detection policies. During the period in dispute, the
bank's fraud detection software generated thirty-seven
individual alerts of possible fraud in connection with the
joint account and Donna's personal account. Pursuant to
the bank's policies, each time an alert is generated, it
is required to be investigated by a bank analyst. After
investigating one such alert in October, 2010, a bank manager
contacted Worcester elder services to report potential elder
abuse of Mauro, but no further action was taken by the bank.
In addition, in an affidavit, a financial consultant engaged
by the plaintiff opined that had the bank followed bank
policies and industry standards, the matter would have been
referred to the bank's corporate security ...

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